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Many of us have heard the phrase “money makes the world go round,” or “you can’t buy happiness” or some other cliché used to describe just how influential money has become in our lives. And why shouldn’t it be? For many, our allowance was the first example of an incentive to do our chores. This reinforcement continued as we got after-school or summer jobs as kids in order to have spending money and worked to pay for college (read: partying at college). It even continues today when we get side or freelance work to supplement our salaried jobs to help pay for hobbies or interests. With this idea of money as a reward ingrained in our behavior, it only stands to reason companies would embrace it and use cash incentives or bonuses to help improve motivation or to reward employees.

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Compensation & Rewards
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Money is the Root of All Evil

Despite the driving force behind money as a reward, there is an equally powerful potential for money to de-motivate employees. Most, if not all, companies will tell you they frown on the open discussion of salary among colleagues, including current rates, bonuses, adjustments, etc. Consider something as simple as the salary of two Web developers hired around the same time—given the (perceived) same responsibilities, task and day-to-day activities, Web Developer A would be very disheartened to learn Web Developer B was making more than he was. “I do the same job as Web Developer B. How come he makes more than I do?” This pattern is also evident in quarterly performance bonuses where one team member receives a bonus but the remaining five do not, with the same question being asked at the end: “Why him and not me?” Even though the opportunity exists for everyone to excel and potentially earn a bonus, these situations often result in a loss of motivation and feelings of disenchantment—the exact things the rewards were developed to eliminate.

Alternatives to Monetary Reinforcement

With the pitfalls associated with monetary-based rewards, companies are coming up with more creative ways to motivate staff and reward productive employees. It is important to note what drives one person may not drive another since the needs of different people vary, but the following provides some insight into ways businesses can successfully promote productive employees.

Training and Seminars

Professionals in the information technology sector will tell you it can be very difficult to keep up with an ever-changing industry. What is considered the latest and greatest technology one week can become a legacy system in the blink of an eye. By offering a training or professional development budget for employees, workers are able to explore new technology or adopt industry best practices to come up with creative and innovative ways to efficiently do their work. This can include fees for conferences, dues for professional organizations, tuition reimbursement or even a budget for purchasing reference books for a department library.

Creative individuals are often motivated by the idea of learning new things and applying what they have learned. Unlike cash incentives of an equal value, providing such opportunities to employees has immediate returns to the company itself, allowing for an influx of new ideas or innovations into the talent base.

More Work as a Reward? You Must Be Kidding…

Absolutely not! When employees demonstrate proficiency in their given area, there exists an opportunity to reward them with additional experience they otherwise may not get within their job. For example, “Patterson, you did a great job handling that last bid. You know, we have an excellent opportunity coming up with McCormick and Co. Are you interested?”

In other situations, providing more autonomy or independence for employees to come up with solutions or solve problems is an excellent way to develop pride in the work being done—people begin to realize they are contributing to something bigger.

Employee Recognition

Highlighting the accomplishments of an individual or a team is an excellent way to reward employees—with little overhead, it demonstrates genuine attention to the accomplishments of the men and women who make up the company. It may be something as simple as receiving a letter from the CEO on your five or 10-year anniversary, a company-wide e-mail showcasing a successful bid or project completion or even just verbal acknowledgement at a company meeting.

Events

Company-wide gatherings are a great way for the organization to reward employees for a job well done. Things such as corporate picnics, holiday parties or holding a pot-luck dinner on the Wednesday before Thanksgiving are great ways to get everyone together as a group and talk about something other than the quarterly earnings report.

Team-building events are also great way to foster unity between employees and can take on different forms. At a previous job, our team would stay late after work on Wednesday and use the local area network to play “Half Life” (a multiplayer first-person 3D shooter video game, for those unfamiliar). The winner was rewarded with a crowbar that had been spray painted gold, and the loser presented with a toilet plunger that had been painted hot pink, and that was your trophy for the week. Despite a strict “no video game” policy for work computers, management saw there was a real team building value in making an exception, requiring only that we provide licensed copies of the game, and lights out by 9 p.m. Still one of my favorite perks from any job, ever.

Flexibility at Work

With the ever-increasing cost of fuel, people faced with a long commute have to deal with the consequences. To address this problem, some companies have extended a “work from home” policy, allowing employees to work from a home office one or more days a week. People are finding this type of flexibility invaluable when trying to balance the load of a career, family and other obligations that put demands on time and availability.

Casual Friday or “jeans day” is another common example of how businesses make exceptions for employees, deviating from the usual “business casual” dress code.

Don’t Forget “The Basics”

Some of the best incentives for motivating employees can be realized in our day-to-day behavior and stem from how supervisors manage their staff and how companies do business as a whole. For example, most people only hear what would be classified by many as negative feedback; however, it is just as necessary to tell people what they are doing right.

Equally important in providing meaningful feedback is the willingness of bosses or managers to receive comments or criticism as well. It is a lot easier for people to become motivated when the goals of the group are clearly communicated in both directions and ideas are received and considered in a fair manner. In fostering two-way dialogue, a sense of ownership is formed in the job, and subsequently employees are more likely to take pride in their work.

Chris Mattie has been working within the Information Technology Sector for over 15 years. During that time, his roles have spanned different technical disciplines and industries, which have provided unique insights into how to leverage technology for business problem solving and highest ROI possible. Specific areas of focus have been in the areas of Software Development, Project Management, Business Process Analysis and Strategic Plan Development. Solutions and projects have ranged in size and scope from single user to full enterprise-level and high-availability systems.

In addition to a bachelor's degree in math and computing science, Mattie has recently completed a Master of Information Systems degree from University of Phoenix, graduating with a 3.97 GPA. At this time he is considering options for his next field of study including but not limited to PMI and/or ITIL certifications.

Despite these endeavors, Mattie has managed to maintain a balance between work and processional life. He has recently gotten married, forming a small family of a wife, two female boxers and a female Eclectus parrot. Over the years, Mattie has enjoyed several different hobbies, including becoming a competent amateur chef and holding a third-degree black belt in Tae Kwon Do.

The most engaging 10 minutes that will question traditional motivation, reward and innoivation theory. http://www.youtube.com/watch?v=u6XAPnuFjJc&feature=player_embedded.
Would 1 "free day", get NZ companies to be more innovative?
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I really like a number of the suggestions in this article. I've successfully used or recommended several of them as motivators during my career as an HR pracitioner.
Now that I'm working for a small, privately owned company (<100 employees) in a rural setting, I have found money to be a HUGE motivator. It really comes back to Maslow's hierarchy of needs - if you don't have the basics, that's all you can think about.
Out here, many people do seasonal jobs for minimum wage. Bonuses and salary increases are reasons to celebrate! Sometimes it means music lessons, a visit to the dentist or new clothes. Too often the raise or bonus effect only lasts a short while.
My point is we need to know enough about our staff to ensure we choose the right motivator for them - be it money, learning opportunities, a gift certificate, etc.
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This was a great article on ways to engage and retain top potentials outside of monetary rewards, which are topics we address often. Thank you for the article. Michelle Randolph, www.linkageinc.com 781-402-5652
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Strongly agree that you must know the demographics of your target audience when you are communicating anything (whether a thank you or details about a product launch). If we think of employees as community members, then we respect their sensibilities and reward/recognize them in ways that demonstrate that. In general, however, my experience tells me that to be recognized with opportunities to Learn is fairly universal (seminars, new projects, a book passed along from a CEO, e-learning, college courses, etc).
I'm a fan of Peter Senge, Systems Thinking and Learning Organizations.
Learning is fundamental to unleashing human capital. Most human beings are genuinely happy when they are really learning and growing.
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Nice article. It is as W. Edwards Deming, McGregor, Herzberg and John Seddon have either told us or are still telling us. Incentives drive the wrong behavior. I might add that another thing a company can do is give them a better job to do (redesign work) and involve them in the decision-making process for the work they do. Both of these can increase the bottom-line and improve culture dramatically.
Regards, Tripp Babbitt
www.newsystemsthinking.com
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Hi Chris,
Thank you for presenting a nice article. Indeed, money no longer remains the sole motivator. And I agree when you consider it as a 'de-motivator'.
In a recession hit business environment, monetary incentives are limited to a few leaving the majority rest dissatisfied. I can see that in my organization as well.
The alternative reward/incentive options suggested by you are relevant and necessary in today's environment. Investment by the organization for employee growth and development, creation of platforms for recognition, job enrichment and similar mechanisms should be increasingly relied upon to motivate employees.
Spot appreciation also works as a motivator. In my organization, employees use an online tool to send compliments to peers, subordinates, bosses within the same function or acorss functions to appreciate and acknowledge good work done.
Organizations may explore intangible rewards more and more and use them as motivators for employees.
Regards,
Sumit Bhattacharya
HCL Technologies Ltd.
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Excellent article. I couldn't agree more. Money doesn’t motivate. It compensates. Each element of your total rewards package must have its own “currency.” Money is the currency of compensation, not motivation or recognition. A simple “thank you” and sincere, specific appreciation of effort will motivate far better than cash that only becomes an expectation and entitlement. Two separate surveys on Bnet also show that employees cherish meaningful work and recognition more than cash. (Surveys cited here: http://globoforce.blogspot.com/2009/10/what-motivates-survey-says-meaning-and.html)
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Chris, you positioning of vital-but-not-believed truism was perfect: "The root of all evil."
My team established an employee referral program for a Fortune-100 client who cringed when we said we wanted the cash incentives taken off the table (not taken away... just off the table). The new branded program promoted the critical role employees play in finding the best new candidates for the company. In fact, the program rightfully noted that employees were THE BEST source of qualified new talent.
It turned out that the idea of playing a critical role in the success of the company and the friend worked many times better than the idea of handing a friends name in for money.
Don't get me wrong... I LOVE MONEY. But to your point some times it gets in the way of knowing the real value of what your audience can deliver.
Thanks for expressing this idea so well.
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Some very practical alternatives to simply increasing pay! You noted: "It is important to note what drives one person may not drive another since the needs of different people vary...." We say: traits drive thinking e.g. a highly detailed person values job security, a sociable person will be inspired by public recognition and enjoy company events, .... Understanding how people are wired is not only good selection and management practice, it can also reduce the cost of compensation! Dan Maxwell profileperformancesystem.com
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Chris,
Thank you for your article. You've summarized several effective non-monetary motivation and reward strategies that we, as HR and OD practitioners need to remember.
In my opinion, the most successful motivational methods are the high-involvement ones that get real commitment from employees.
Thanks again for your article, Chris.
Kevin Miller
480-513-0300
od-consulting.com
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